What is Social Security?

Social Security is a federal program that provides retirement income, disability benefits, and survivor benefits to eligible workers and their families. It provides monthly cash benefits to retired workers, disabled individuals, and surviving spouses or dependents. The program is funded through Federal Insurance Contributions Act (FICA) payroll taxes, which levy a 6.2% tax on both employers and employees up to an annual maximum wage limit.

For the 2026 tax year, the Social Security taxable wage base is $184,500 ($176,100 in 2025). Earnings above this limit are not subject to the tax. Workers earn 'credits' based on their annual earnings, needing a minimum of 40 credits (equivalent to 10 years of work) to qualify for retirement benefits. Benefit amounts are determined using the worker's highest 35 years of indexed earnings.

Retirees can claim reduced benefits starting at age 62. Claiming at full retirement age (FRA), which is 67 for individuals born in 1960 or later, yields unreduced benefits. Delaying benefits past FRA increases the monthly payout by 8% per year up to age 70. Depending on provisional income, up to 85% of Social Security benefits may be subject to federal income tax.